Media: Spotlight On: Cable TV - OFT inquiry brings a string of conspiracy theories into play/How much regulation of the pay TV industry is needed? Alasdair Reid investigates

Wherever the Office of Fair Trading treads these days, conspiracy theory is bound to follow. And the OFT has been particularly busy in recent months. Not content with looking at consolidation in the cable industry and at the possible implications of a Carlton merger with United News and Media, the OFT announced last week that it is to look at BSkyB’s overall position in pay television.

Wherever the Office of Fair Trading treads these days, conspiracy

theory is bound to follow. And the OFT has been particularly busy in

recent months. Not content with looking at consolidation in the cable

industry and at the possible implications of a Carlton merger with

United News and Media, the OFT announced last week that it is to look at

BSkyB’s overall position in pay television.



So what does this mean? There are two theories in play here - one pro

Rupert Murdoch, the other anti - and each has been sustained by some

gentle spin doctoring over the past week. Theory one is that it is to do

with Murdoch’s anger at the news of a possible Carlton-United deal and

rumours that the deal had already been given tacit government

blessing.



Murdoch has always been hobbled, particularly when it comes to

involvement in terrestrial broadcasting, by rules on concentration of

ownership. Why should others be treated differently? This, according to

the theory, is the Government’s way of mollifying Murdoch. If the OFT is

to recommend liberalisation in the terrestrial market, it might be

disposed to do the same in pay TV.



Indeed, John Bridgeman, the OFT’s director-general, said that

liberalisation was very much on his mind: ’Our approach is from the

perspective that regulation should be kept to the minimum necessary to

promote competition.’ In other words, BSkyB could now be free to be far

more aggressive in its dealings with cable and with its digital rival,

ONdigital.



Not so, say sources within cable companies. They favour conspiracy

theory number two. This holds that the OFT is embarrassed at having

interfered in the agreed - and perfectly reasonable - merger between NTL

and the cable division of Cable and Wireless. So to redress the balance

it is turning up the heat under Murdoch too. The outcome is likely to be

more restrictions on the way Sky sells its programming.



Who’s likely to be right? There is, of course, a third possibility - the

more the OFT digs, the more it realises just how much more digging needs

to be done. That might be the most worrying of all. While US companies

are busily reinventing an industry fit for a new century, Britain

manages to agonise over the peeling of some very small potatoes indeed.

Is the OFT’s busy spell further evidence that we’re likely to be left

behind as the Time Warner-AOL era dawns?



Graham Duff, the chief executive of Zenith Media, says that it doesn’t

make sense to investigate the media market piecemeal: ’You can’t look at

any of this in isolation. The ability to step back is an important part

of our job - we have to ensure that the very best and most relevant

advertising opportunities are available to our clients. But that’s a

question that cuts right across all of the OFT’s investigations. It’s

difficult to take a view on the way the broadcast market as a whole is

likely to evolve. I don’t know how the OFT intends to do that.’



Paul Longhurst, the managing director of Quantum New Media Services,

agrees. He says: ’All of this OFT activity obviously brings home to

everyone the interconnectedness of the market. But you could argue that

it makes it all the more probable that we’re likely to see increasingly

broadbased strategic partnerships.’



Longhurst is more convinced than ever that regulators need to see the

overall situation. ’Sometimes the participants lack the big picture too.

Cable companies may want to have checks placed on the power of Sky when

it comes to programming, but you could also argue that cable companies

should be forced to open up their networks to internet providers - and

the cable companies might not be so keen on that because they’ve

invested a lot in building their own interactive services.



’But the main worry is that a lot of unnecessary bureaucracy stifles

progress. I wish regulators would understand the international

picture.



But I’m convinced that, at the very least, the domestic market should

come under a single microscope,’ Longhurst says.



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